Successfully reported this slideshow.
We use your LinkedIn profile and activity data to personalize ads and to show you more relevant ads. You can change your ad preferences anytime.

Strategy Presentation 30 NOV 2010


Published on

KBC Small Cap Conference of 30 NOV 2010

Published in: Investor Relations, Business
  • Login to see the comments

  • Be the first to like this

Strategy Presentation 30 NOV 2010

  1. 1. RECTICEL Strategy Update KBC – Small Cap Seminar 30 November 2010 Olivier Chapelle Chief Executive Officer
  2. 2. Agenda 1. Strategic Review Process 2. Strategic Observations 3. Polyurethane Market 4. Individual Business Line Strategies 5. Recticel Portfolio & Strategy
  3. 3. Agenda 1. Strategic Review Process 2. Strategic Observations 3. Polyurethane Market 4. Individual Business Line Strategies 5. Recticel Portfolio & Strategy
  4. 4. <ul><li>Phase I – March  May 2010 </li></ul><ul><ul><li>Insulation, Bedding, Flexible Foams, Automotive Interiors and Proseat teams have developed their respective strategic plans </li></ul></ul><ul><ul><li>Iterations and discussions with the Group, no Strategy consultant used </li></ul></ul><ul><ul><li>Management Committee meeting of 7/8 June dedicated to reviewing the Business Lines plans </li></ul></ul><ul><li>Phase II – June 2010 </li></ul><ul><ul><li>The Group has assessed its overall situation, market, portfolio of businesses and growth opportunities, and has generated this strategy proposal </li></ul></ul><ul><ul><li>The recommendation is supported by the Management Committee </li></ul></ul>Strategic Process
  5. 5. Agenda 1. Strategic Review Process 2. Strategic Observations 3. Polyurethane Market 4. Individual Business Line Strategies 5. Recticel Portfolio & Strategy
  6. 6. Through this exercise, we will try to provide answers to the following observations :  Recticel remains with a too high debt level , despite significant debt reduction over the last three years,  Recticel has insufficient financial means to properly invest in and develop its four business segments,  Recticel is currently concentrated in Europe (>95 % of sales),  Recticel is highly dependant on Insulation profits in Belgium, and exposed to the structural long term risks of the Automotive Industry. Recticel Today : strategic observations
  7. 7. Agenda 1. Strategic Review Process 2. Strategic Observations 3. Polyurethane Market 4. Individual Business Line Strategies 5. Recticel Portfolio & Strategy
  8. 8. The global PU application market represented about €38Bn globally in 2009 :  About 11 million tons of raw materials were converted into PU applications worldwide % in volumes : sources BASF & Dow Polyurethane market : Size
  9. 9. <ul><li>Furniture & Bedding </li></ul><ul><ul><li>mattresses </li></ul></ul><ul><ul><li>sofa & chair cushions, armrests </li></ul></ul><ul><ul><li>office furniture </li></ul></ul><ul><li>Building & Construction </li></ul><ul><ul><li>rigid foam insulation panels </li></ul></ul><ul><ul><li>sprayed polyurethane rigid foam </li></ul></ul><ul><ul><li>carpet backing and cushioning </li></ul></ul><ul><li>Transportation </li></ul><ul><ul><li>seating foam, armrests, headrests </li></ul></ul><ul><ul><li>fabrics back-foaming </li></ul></ul><ul><ul><li>interiors skins : instrument & door panels </li></ul></ul><ul><ul><li>steering wheels, roof liners </li></ul></ul><ul><ul><li>energy absorbing foam </li></ul></ul><ul><ul><li>acoustic foam (NVH) </li></ul></ul><ul><ul><li>exterior panels </li></ul></ul><ul><ul><li>interior & exterior coatings </li></ul></ul><ul><ul><li>windows encapsulation </li></ul></ul><ul><li>Coatings, Adhesives, Elastomers, Sealants </li></ul><ul><ul><li>glues, paints and protective coatings </li></ul></ul><ul><ul><li>pipe coatings </li></ul></ul><ul><ul><li>sports tracks and turf </li></ul></ul><ul><ul><li>filter encapsulation </li></ul></ul><ul><ul><li>sealants for windows </li></ul></ul><ul><ul><li>shoe soles </li></ul></ul><ul><ul><li>gloves </li></ul></ul><ul><li>Appliances </li></ul><ul><ul><li>insulation </li></ul></ul><ul><li>Footwear </li></ul><ul><ul><li>soles </li></ul></ul><ul><li>Packaging </li></ul><ul><li>Textile </li></ul>Polyurethane : Leading Markets & Applications sources : BASF, Dow, Bayer, Huntsman
  10. 10. % in volumes : sources BASF & Dow  Footwear and Textile segments are mainly located in Asia  All other segments are represented in all four regions Polyurethane : Leading Markets & Applications
  11. 11. Polyurethane Market : Global Shift Global MDI (70% of isocyanates volumes) 2010 YTD5 volumes already higher than pre-crisis 2008 YTD5.... !! (Source : Huntsman) Investment Priorities in raw material capacities : - #1 is Asia/China - Selective in EU - No more investments in USA (Sources : Huntsman, BASF, DOW, Bayer) Source: t, 2010 Asia Europe Americas
  12. 12. <ul><li>Some worldwide MEGATRENDS have emerged, which are irreversible : </li></ul><ul><li> Environment protection, and Energy preservation </li></ul><ul><ul><li> Building climate management : 22% of global energy consumption </li></ul></ul><ul><ul><li> From a “carbon footprint” standpoint : 1 oil barrel used to make PU insulation board will return 156 barrel over lifetime </li></ul></ul><ul><ul><li> Invest in insulation is today 6 times more efficient than in photovoltaics </li></ul></ul><ul><ul><li> Stronger & Lighter : everything that moves will have to be lighter </li></ul></ul>Global Megatrends : Positive PU contributions Source : McKinsey & Co
  13. 13. <ul><li>Some worldwide MEGATRENDS have emerged, which are irreversible : </li></ul><ul><li> Demographics and Ageing </li></ul><ul><ul><li> Nutrition of a growing and ageing population, eating more and more proteins (1kg of meat requires 100kg of vegetal + 1.5m³ of water…) </li></ul></ul><ul><ul><li> Water Supply in quality and quantity is becoming a strategic goal </li></ul></ul><ul><li> Emergence of new economical super-powers, such as China , and to a smaller extent the other BRIC members and Middle-East </li></ul><ul><li>Luxury & Well Being for the fast developing middle/upper classes </li></ul><ul><li>Strong & Light for anything pertaining to Transportation means </li></ul>Global Megatrends : Positive PU contributions
  14. 14. The PU application market is very fragmented :  More than 100 foamers (Flexible Foam, Insulation, Seating) in Europe  Recticel (€1.3Bn), Inoac (€1.4Bn), Carpenter (€1Bn), Foamex (€0.5Bn), Vita (€0.6Bn), Foamline (€0.4Bn), Organica (€0.3Bn) together represent 13% of worldwide PU foaming market  By comparison, Bayer, BASF and Dow represent 50% of worldwide PU raw material market, resulting in tremendous power to control raw material pricing Polyurethane Market : Competition
  15. 15. <ul><li>The Polyurethane applications market is attractive : </li></ul><ul><li>It is a large, regional (seldom global) market of €38 Bn </li></ul><ul><li>Asia now the largest PU market </li></ul><ul><li>CAGR of 5% globally, faster than GDP by 2% thanks to material substitution </li></ul><ul><li>Versatile, high performance material, enabling proper positioning </li></ul><ul><li>Average market profitability (Ebit) higher than 5% </li></ul><ul><li>Broad range of applications & segments, offering diversification opportunities and protection against cyclicality </li></ul><ul><li>Several applications are linked to worldwide Megatrends </li></ul>Market : Conclusions
  16. 16. Agenda <ul><li>1. Strategic Review Process </li></ul><ul><li>2. Strategic Observations </li></ul><ul><li>3. Polyurethane Market </li></ul><ul><li>Individual Business Line Strategies </li></ul><ul><li>5. Recticel Portfolio & Strategy </li></ul>
  17. 17. <ul><li>STABILIZE & HARVEST through defensive set of measures </li></ul><ul><ul><li>Pursue product/process development, maximizing the “appeal” of our technology & business </li></ul></ul><ul><ul><li>Maximize new program acquisitions, with adequate profitability (min. 30% contribution), re-utilizing existing idle assets </li></ul></ul><ul><ul><li>Follow our customers in China, on a 100% Recticel basis </li></ul></ul><ul><ul><li>Permanently adapt industrial footprint and capacity to customer needs </li></ul></ul><ul><ul><li>Maintenance or utilities investments only </li></ul></ul>Interiors : Strategic Scenario
  18. 18. <ul><li>Optimize & Redeploy through new automotive business propositions </li></ul><ul><ul><li>Given the decline in value of the Foam Pads for seating applications, and our significant market share, stabilize sales and optimize profitability </li></ul></ul><ul><ul><li>Pursue R&D, and generate profitable sales growth with Trim Parts (headrests, armrests), EPP solutions, headliners, loadfloors… </li></ul></ul><ul><ul><li>Carefully evaluate customer request to be served in greater EU </li></ul></ul><ul><ul><li>Minimize investment needs & capital intensive applications </li></ul></ul><ul><ul><li>Permanently adapt industrial footprint and capacity to customer needs </li></ul></ul>Proseat : Strategic Scenario
  19. 19. <ul><li>GROW with a combination of organic and external initiatives </li></ul><ul><ul><li>Internal sales growth of 5% per year will be generated by : </li></ul></ul><ul><ul><ul><li>Deployment of foam & product innovation throughout our brand portfolio </li></ul></ul></ul><ul><ul><ul><li>Significant supporting marketing budget </li></ul></ul></ul><ul><ul><ul><li>Focus on Nordic Countries, Switzerland </li></ul></ul></ul><ul><ul><ul><li>France will not be an area of focus in the coming years </li></ul></ul></ul><ul><ul><li>Acquisition targets will be evaluated, with priority in Nordic Countries, UK and Eastern Europe </li></ul></ul><ul><ul><li>A project in China, jointly with Flexible Foam, will be set up and ready for decision by March 2011 </li></ul></ul>Bedding : Strategic Scenario
  20. 20. <ul><li>Rationalize & Upgrade with selective growth projects </li></ul><ul><ul><li>Rationalize & Upgrade through </li></ul></ul><ul><ul><ul><li>Plant shutdowns & Restructurings </li></ul></ul></ul><ul><ul><ul><li>Divestment from non-core small activities </li></ul></ul></ul><ul><ul><ul><li>Upgrading Investment plan </li></ul></ul></ul><ul><ul><li>Growth initiatives </li></ul></ul><ul><ul><ul><li>Agro-Foam segment </li></ul></ul></ul><ul><ul><ul><li>Innovative corporate projects launches </li></ul></ul></ul><ul><ul><ul><li>Expansion in China, jointly with Bedding </li></ul></ul></ul><ul><ul><ul><li>Potential expansion in Turkey </li></ul></ul></ul>Flexible Foam : Strategic Scenario
  21. 21. <ul><li>GROWTH as a combination of organic & external initiatives </li></ul><ul><ul><li>Focus on Europe and Building </li></ul></ul><ul><ul><li>Internal sales growth of 8% per year will be generated by : </li></ul></ul><ul><ul><ul><li>Continued development in Belgium </li></ul></ul></ul><ul><ul><ul><li>Commercial focus in France (Etics) and UK </li></ul></ul></ul><ul><ul><ul><li>Fix our Netherlands commercial organisation </li></ul></ul></ul><ul><ul><ul><li>Understand Germany, and prepare for Central Europe </li></ul></ul></ul><ul><ul><li>Acquisition targets will be evaluated </li></ul></ul><ul><ul><li>Intensify R&D efforts to prepare the next Generation PUR/PIR products </li></ul></ul>Insulation : Strategic Scenario
  22. 22. Agenda 1. Strategic Review Process 2. Strategic Observations 3. Polyurethane Market 4. Individual Business Line Strategies 5. Recticel Portfolio & Strategy
  23. 23. <ul><li>Strengths </li></ul><ul><li>competitive raw materials prices </li></ul><ul><li>low cyclicality (several end-use mkt) </li></ul><ul><li>strong brands </li></ul><ul><li>competent R&D </li></ul><ul><li>integration foaming/bedding </li></ul><ul><li>good coverage of Europe </li></ul><ul><li>Weaknesses </li></ul><ul><li>highly leveraged financial structure </li></ul><ul><li>over exposure to Automotive in EU </li></ul><ul><li>relative lack of talents </li></ul><ul><li>underperforming activities/assets </li></ul><ul><li>“ European only” </li></ul><ul><li>automotive: lack of bargaining power </li></ul>SWOT Analysis <ul><li>Opportunities </li></ul><ul><li>development in BRIC’s </li></ul><ul><li>substitution of competitive material in applications linked to Megatrends </li></ul><ul><li>regulatory environment in EU in favour of insulation </li></ul><ul><li>Threats </li></ul><ul><li>raw material supplier concentration </li></ul><ul><li>product stewardship </li></ul><ul><ul><li>fire resistance </li></ul></ul><ul><ul><li>recyclability </li></ul></ul><ul><li>fragmented competition </li></ul><ul><li>automotive: insourcing by OEM’s & T1’s </li></ul>
  24. 24. 9-Box Grid : positioning of the 5 Recticel segments
  25. 25. <ul><li>Keep Recticel focused on PU applications, focus on higher growth segments on a broader international basis : </li></ul><ul><ul><li>Grow Insulation Solutions </li></ul></ul><ul><ul><li>Grow Bedding Systems </li></ul></ul><ul><ul><li>Rationalise and modernise Flexible foams, and seize selective growth area </li></ul></ul><ul><ul><li>Stabilize Automotive, make it a consistent contributor to Recticel success </li></ul></ul><ul><ul><li>Acquisition in Insulation </li></ul></ul><ul><ul><li>Acquisition in Bedding </li></ul></ul><ul><ul><li>Invest in China for Flex Foam, Bedding and maybe Insulation </li></ul></ul>Recticel : Strategy
  26. 26. Q & A Thank you for your attention